The Seventh Habit: Always Review Renewals

The UK’s energy regulator, Ofgem, announced recently that a trial aimed at making it much easier for consumers to switch energy suppliers in order to get the best tariff had been successful. It probably comes as no surprise that anything that makes it more straightforward to negotiate the multiple pricing structures on offer would be welcomed by busy, and often confused, consumers.

Hospitality businesses often face the same challenge when it comes to dealing with a wide range of prices, offers and deals from suppliers, across the whole spectrum of products and services they need to buy.

A busy, time-pressed operator could be forgiven for sticking with what they know, in terms of both the supplier and the price. However, calling for competitive quotes keeps suppliers on their toes – and the business on top of its game.

Lynx Purchasing’s new insight guide, ‘The Seven Habits of Highly Effective Purchasing Teams’, details seven proven ways that businesses can make simple improvements to their buying, and the seventh habit advises us all to ‘Always Review Renewals’.

In a challenging market, businesses can be forgiven for putting the focus on customers if they feel that the supply side of the operation seems to be ticking over nicely. With dozens of annual contracts across the business in every department, it’s easy to let them roll-over or be automatically renewed, especially if you and your managers are happy with the service.

Our advice to stop this practice, and instead automatically call for competitive quotes on everything from utilities to insurance, waste management and all service contracts. Doing this will achieve two things – the business will get the best value contract, and it will ensure better service either from the current supplier who has to remain keen and competitive, or from a new supplier who knows that the business carries out annual reviews.

This was the case for one of our new hotel customers, which asked us to look at its waste management contract which had been rolling on without any scrutiny for several years. Although the contract still had six months to run, we put it in the diary and called for competitive quotes including the incumbent contractor.

Keen to keep the business, they came up with the best quote and we were able to put in place a new contract that reduced the hotel’s annual spend from £50,000 to £40,000. We’ve now set up a schedule to annually review all of the businesses’ service contracts.

Action: Create a comprehensive annual contracts list, and contracts diary, with scheduled review dates and processes to follow.

You can download a free copy of the Seven Habits of Highly Effective Purchasing Teams from our website at  https://www.lynxpurchasing.co.uk/seven-habits-highly-effective-purchasing-teams/.

If you want to find out more about how you can tap into the experience and expertise of the   Lynx team to help you make the most of the Seven Habits of Highly Effective Purchasing Teams, email us at savings@lynxpurchasing.co.uk  or call 01325 377 845.

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